Taipei:The Cabinet has approved a draft amendment to the Securities Transaction Tax Act that proposes a 10-year extension of the tax exemption on corporate bonds, financial bonds, and passive bond exchange-traded funds (ETFs) until December 31, 2036. This extension would also expand the exemption to include actively managed bond ETFs.According to Focus Taiwan, the proposal follows significant growth in Taiwan's domestic bond market since the original exemption was implemented in 2017. The Taxation Administration reported that the outstanding value of corporate and financial bonds rose to NT$4.66 trillion in 2025 from NT$2.66 trillion in 2017, with total trading values increasing from NT$17.23 trillion to NT$19.73 trillion over the same period.Additionally, passive bond ETFs saw their outstanding value increase dramatically from NT$40 billion in 2017 to NT$3.02 trillion in 2025, with total trading values rising from NT$70 billion to NT$2.16 trillion. The current exemptions for bonds and passive bond ETFs a re set to expire on December 31.The Ministry of Finance stated that the tax exemption has been beneficial in stimulating Taiwan's capital market. The draft amendment proposes that the exemption for active bond ETFs commence on January 1, 2027, and continue through December 31, 2036. The ministry forecasts that by 2036, the outstanding value of corporate and financial bonds could reach NT$17.96 trillion, with annual trading values potentially reaching NT$93.19 trillion.For bond ETFs, the combined values of passive and active ETFs are estimated to reach NT$12.75 trillion by 2036, with annual trading values potentially hitting NT$7.65 trillion. The inclusion of active bond ETFs aims to ensure tax neutrality among similar financial products.Cabinet spokesperson Michelle Lee conveyed Premier Cho Jung-tai's belief that the amendment will enhance asset management activities, align with the government's goal of developing Taiwan into an "Asian asset management center," and further promote the capital market's d evelopment. Deputy Finance Minister Chen Yong-sheng noted that while the impact on tax revenue is still under assessment, the extension is expected to benefit companies and the financial industry.The proposal awaits legislative review and approval before becoming law.